An automated pipeline that transforms hypotheses into validated prediction market strategies. Seven stages, three statistical gates, zero tolerance for overfitting.
In traditional quant trading, you backtest against 20 years of continuous price data for the same instrument. In prediction markets, every market is unique — born, lives briefly, resolves to 0 or 1, and dies. You can't backtest "a strategy on ECB March 2026." You backtest "a pattern across all ECB rate decisions as a class."
The Strategy Factory solves this by shifting the unit of analysis from instruments to event-type categories.
Every strategy flows through the same pipeline. At each gate, it either passes or is rejected. No exceptions, no shortcuts, no re-tuning after failure.
An automated pipeline that transforms hypotheses into validated strategies, deploys the survivors with risk-controlled capital, monitors them against statistical benchmarks, and retires them when edge decays — while simultaneously developing replacements.
The classical mechanical trading system framework — Training, Validation, Out-of-Sample — adapted for prediction markets where samples are split across events, not time periods.
Traditional quant backtesting uses thousands of data points. PM event categories have tens to hundreds. The Strategy Factory compensates with: conservative parameter selection (wide robustness windows), mandatory paper trading before live deployment, small initial position sizes (2% of capital), rapid feedback loops, and — critically — the Structural Event Clustering that pools structurally similar events across categories to increase effective sample sizes.
First cohort entering the pipeline. Five verticals, 210-360 trade signals per year. Six exploit European information advantages. Three require German/French/Italian language access.
Overfitting is the primary risk in PM backtesting due to small sample sizes. These rules are system-enforced, not suggestions.
v1.0 running since February 2026. First strategies in the pipeline. The methodology is proven — now being productized as infrastructure.